Militants linked to Islamic State swept through a southern Philippine city, beheading a police chief, burning buildings, seizing a Roman Catholic priest and his worshippers and raising the black flag of Isis, regional authorities have said.

President Rodrigo Duterte, who had declared martial law across the southern third of the country, warned he may expand it nationwide.

At least 21 people were killed in the fighting, officials said.

As details of the attack in Marawi emerged, fears mounted that the largest Roman Catholic state in Asia could join a growing list of countries grappling with the spread of influence from Isis in Syria and Iraq.

The violence erupted on Tuesday after the army raided the hideout of Isnilon Hapilon, a commander of the Abu Sayyaf militant group that has pledged allegiance to Isis. He is on Washington’s list of most-wanted terrorists with a $5m (£3.9m) reward for information leading to his capture.

Archbishop Socrates Villegas, president of the Catholic Bishops Conference of the Philippines, said fighters had forced their way into the Marawi Cathedral and seized a priest, 10 worshippers and three church workers.

“They have threatened to kill the hostages if the government forces unleashed against them are not recalled,” Villegas said in a statement.

“[The priest] was not a combatant. He was not bearing arms. He was a threat to none. His capture and that of his companions violates every norm of civilised conflict,” he added.

The husband of a woman being held hostage said he was worried about his wife, a secretary at the cathedral, because she does not have her medicines for a heart problem.

“I hope they free them, including Father Chito and my wife and their companions, because they are innocent,” Jaime Mayormita told Manila’s DZMM radio.

Deacon Greg Kandra is a Roman Catholic deacon in the Diocese of Brooklyn, New York. For nearly three decades, he was a writer and producer for CBS News, where he contributed to a variety of programs and was honored with every major award in broadcasting. Deacon Greg now serves as Multimedia Editor for Catholic Near East Welfare Association (CNEWA.) He and his wife live in Forest Hills, New York.